New Delhi, Sept. 11: The cabinet today cleared the bio-fuel policy, setting a target of 20 per cent blending by 2017 and proposing support to farmers to grow the jatropha plant on wastelands.

Bio-fuels are environment friendly and include ethanol and an oil extract of jatropha. While ethanol is blended with petrol, the jatropha extract is blended with diesel. Twenty per cent blending means one-fifth of a litre of petrol or diesel will comprise ethanol or the extract of jatropha. Blending also leads to saving in petro and diesel.

Officials said India would avoid the mistake of the West and ensure that bio-fuel crops were not grown on arable land. “Support prices which will be increased periodically are only for bio-fuel crops grown on wastelands,” officials said.

India has 63.85 million hectares of wasteland, which is 20.17 per cent of the total geographical area of the country (328.72 million hectares).

The policy has proposed scrapping taxes and duties on the jatropha extract and declared goods status on the extract and ethanol. Declared goods status means the two will attract a uniform central sales tax rather than varying rates across states.

The government has identified 64 million hectares for jatropha, an oilseed which grows on arid land and needs little care.

Officials said the oil companies would set the minimum purchase price of bio-diesel (jatropha extract) and it would be linked to the prevailing diesel price.

Sandeep Chaturvedi, president of the Biodiesel Association of India said, “The bio-diesel should be purchased at the actual cost, which is about Rs 41-42 per litre. Only such measures would encourage bio-diesel production in the country.”

Many companies such as Ruchi Soya, D1 Williamson Magor Bio Fuel Limited, IKF Green Fuel Ltd, Reliance Life Sciences have made investments in jatropha.

IMF quota

The cabinet today approved a proposed amendment in the International Monetary Fund’s (IMF) articles of agreement, increasing India’s quota in the multilateral funding agency.

India’s quota in the IMF, in terms of special drawing rights or reserve asset, will go up to 2.44 per cent from 1.91 per cent.

Reserve assets, which are supposed to supplement a country’s official reserves, are a potential claim on the freely usable currencies of member countries to determine the exchange value of one’s own currency unit.